Your home loan comes with a long repayment tenor, usually between 10 and 20 years. And it may be difficult to predict your financial standing for such a long duration. What if you face financial difficulties because of an unforeseen event? What if you face a situation where you are unable to make your home loan instalment?

Any non-payment of your EMI invites bounce charges as well as penal interest. And while you cannot foresee mishaps and financial difficulties, you can still be prepared. Careful financial planning can help you manage and repay your home loan in a timely manner, so that you do not end up defaulting.

Here are some tips to help you plan for your future EMIs and avoid defaulting on your home loan.

1. Plan Your Investments before You Take A Home Loan

Before you decide to apply for a home loan, it is a good idea to work out your finances. You can do this by creating a worksheet with details about your income and expenditure. This will show you the real picture about your monthly budget. Once you draw up this budget, decide how much you can afford as the EMI for your home loan. Based on this, you can set a budget for your home and go on to apply for a home loan. To make your repayment easier, you can begin investing your spare funds into a high-return option. This will give you a financial cushion in case your income is diverted into other emergencies, so that you can still be timely with your EMI payments.

2. Find a Home Loan with Favourable Interest Rate

Home loan interest rates may vary across lenders. So, when you look at choosing a home loan lender, find one that offers you a competitive interest rate. Understand the difference between fixed and floating interest rates and select one that suits your budget. You can use an online home loan EMI calculator to determine your potential EMIs and explore your options till you choose the right one.

3. Explore a Home Loan with Flexi Hybrid Facility

To ensure you repay your home loan without delay or default, it helps to have greater flexibility in your loan terms. This could be in the form of a longer tenor, you may find a window of 25 years more comfortable, or a 3 EMI holiday – which gives you the time to organise your finances before you start repayment. A Flexi Hybrid facility is a unique new loan facility that offers you greater flexibility with your home loan. Lenders like Bajaj Finserv offer this, which lets you enjoy a principal holiday on your home loan for up to 4 years. As your monthly income rises, you can choose to pay larger EMIs, thereby reducing the chances of default.

4. Reduce Your EMI Burden with Pre-payments

You can reduce the overall interest on your home loan and pay off your loan quicker or reduce your EMIs by making regular part-prepayments. Perhaps you have had a recent inflow of funds, a bonus or an inheritance; use this to prepay your home loan. A pre-payment calculator can help you calculate the impact of such a move.

5. Refinance Your Home Loan to Enjoy Lower EMIs

Another rewarding way of reducing your chances of defaulting on your home loan EMIs is by availing home loan refinance. You can choose this path in case you find your existing EMIs are a burden. Or if you are looking for a top-up loan. Try negotiating the terms of your home loan with your existing lender or simply switch lenders to refinance your existing loan at a lower interest. This will immediately reduce your EMIs.

Use these tips to avoid default or delays on your home loan instalments. Get started by choosing the right lender who offers pre-approved home loans on easy terms and a competitive interest rate. Bajaj Finserv offers home loan at attractive interest rates and easy balance transfer. All you need to do is share your basic details, check your pre-approved home loan offer and avail your home loan.

 

This is a sponsored article by Bajaj Finserv. The Telegraph India editorial team played no role in creating this content